Table to Compute Net Profit for CSR contribution as per Section 198 of Companies Act, 2013
| Particulars | FY | |
| Net profit after tax* | ||
| Add : | Allowed Credits | |
| 1 | Profit on sale of immovable property | |
| ( Original Cost – WDV ) | ||
| Less : | Credits Disallowed | |
| 1 | Premium on shares or debentures | |
| 2 | Profit on sale of forfeited shares | |
| 3 | Profit on sale of immovable property | |
| (Sale Value of Immovable Property – Original Cost ) | ||
| 4 | Surplus in P&L on measurement of asset or liability at fair value | |
| Less : | Expenses Allowed | |
| 1 | All the usual Working Charges | |
| 2 | Director’s Remuneration | |
| 3 | Bonus or Commission paid to Staff | |
| 4 | Tax on escess or abnormal profits | |
| 5 | Tax on business profits imposed for special reasons | |
| 6 | Interest on Debentures | |
| 7 | Interest on Loans | |
| 8 | Expenses on repairs ( other than Capital Expenditure ) | |
| 9 | Contributions made under section 181 ( Bonafide Charitable Trusts ) | |
| 10 | Depreciation | |
| 11 | Prior period items | |
| 12 | Legal liability for compensation or damages | |
| 13 | Insurance Expenses | |
| Add : | Expenses Disallowed | |
| 1 | Income Tax | |
| 2 | Compensations, damages or payments made voluntarily | |
| 3 | Capital Loss on sale of undertaking or part thereof ( Not include losses on sale of asset ) | |
| 4 | Expenditure in P&L on measurement of asset or liability at fair value | |
| * Net profit after tax is taken as base and accordingly the adjustments need to be considered. | ||
(Compiled by CA Vivekanand Pote who is Working as Finance Professional in Automobile Industry and can be contacted at vcpote@rediffmail.com)
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While calculating net profit before tax do we need to add back contribution done to CSR
PBT to be taken as base figure to calculate Net Profit.. pls refer compendium on CSR
whether extraordinary items would be included while calculating net profit as per csr expenditure ( section 198)
Should we consider losses to calculate average net profits for working our % contribution? E.g. a company has shown the following results –
Year 1 = Loss Rs. 200 Lacs
Year 2 = Profit Rs. 150 Lacs
Year 3 = Profit Rs. 200 Lacs
Average of 3 years = (-200 + 150 + 200) / 3 = Rs. 50 Lacs.
So should we consider 2% of Rs. 50 Lacs or we should consider only positive figures for average net “profits” by ignoring loss in year 1 and calculate average of last 3 years. I.e. (Ignore loss + 150 + 200) / 3 = 350/3 = Rs. 117 Lacs on which we calculate 2% for CSR spend.
Pl clarify
Whether Accumulated losses are adjusted while computation of profit u/s 198.
Hi
Whether Depreciation of Revaluation of Assets charged in P&L is a disallowed expenditure for computation of Net profit us. 198
Sorry , the format is not correct .
Nobody use this .
This is an example of how u should not compute profit as per section – 198 .
Please confirm that it is a wrong format .
The format is not correct. Please do not use this.
Hi,
I want to ask whether loss on sale of immovable property/ fixed assets considered in any of the above heads while computing profit under section 198?
i want to that whether Loss on sale of immovable property/fixed asset considered in any of the above heads while computing the profits under section 198 ?
Hi,
Already deducted below expeses from profits, sec 198, excluded below expenditure
Less : Expenses Allowed
1 All the usual Working Charges
2 Director’s Remuneration
3 Bonus or Commission paid to Staff
4 Tax on escess or abnormal profits
5 Tax on business profits imposed for special reasons
6 Interest on Debentures
7 Interest on Loans
8 Expenses on repairs ( other than Capital Expenditure )
9 Contributions made under section 181 ( Bonafide Charitable Trusts )
10 Depreciation
11 Prior period items
12 Legal liability for compensation or damages
13 Insurance Expenses
Hi,
We have Dividend income from Mutual Funds (Mutual Funds AMC company covered under CSR), while checking eligiblity, should we exclude that dividend income from net profit?
Thanks,
Rakesh
Should we consider losses to calculate average net profits for working our % contribution? E.g. a company has shown the following results –
Year 1 = Loss Rs. 200 Lacs
Year 2 = Profit Rs. 150 Lacs
Year 3 = Profit Rs. 200 Lacs
Average of 3 years = (-200 + 150 + 200) / 3 = Rs. 50 Lacs.
So should we consider 2% of Rs. 50 Lacs or we should consider only positive figures for average net “profits” by ignoring loss in year 1 and calculate average of last 3 years. I.e. (Ignore loss + 150 + 200) / 3 = 350/3 = Rs. 117 Lacs on which we calculate 2% for CSR spend.
If we are already starting calculation from PAT, then why are we deduction all usual expenses again?
The above format is not the correct format, please do not refer the same .
I want to know whether one time gain on sale of investment to be included for calculation of net profits for CSR.
expenses allowed – director’s remuneration or all director’s remuneration (ie. whether including Managing Director, Whole Time Director or not)
What is meant by
” All the usual working charges”
For Calculation of profit for FY 14-15,if dividend received from a company which is complying with the sec. 135…will the dividend will be deducted from calculation of avg. net profit of 3 yrs.???
Hi,
Pls tell me it is profit before tax or after tax for 5 crore limit and if I see Sec 198 of Companies act,2013 no where it is mentioned profit after tax.
whatsoever profit we already deduct depreication or director remuneration so why we have to deduct again.
weather provision for deferred tax will be added back to net profitt like normal income tax for calculating profit for CSR expense eligibility
the formula say “Less : Expense allowed” e.g.usual working charges, Directors’ remuneration etc. to calculate the profit u/s 198 but when we say profit as per profit & loss account, these expenses have already been deducted. Pl. clarify.
Regards
PLESE SEND ME FORMAT IN EXCEL
If the figure is negative after the aforesaid adjustments, would it be called net loss u/s 198. This is important as for determining 2 % limit for csr purposes, would net loss u/s 198 be considered if in one of the three years there is loss u/s 198 or would it be ignored.
Hi,
As per the above calculation table, the profit is as per section 198. I would like to know whether subsection L of section198 “the excess of expenditure over income, which had arisen in computing the net profits….” is required to adjust towards current year profit.